# Final 2008 Answer - Econ 110 L3 L4 Spring 2008 Instructor...

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1 Econ 110 L3 & L4 Spring, 2008 Instructor: Yan Yu Final Exam Name: __________________ I.D.#:___________________ Seat Number:__________________ General Instructions: You have 180 minutes for this final exam. You may use calculators. Please check first if you have a total of 9 pages including this cover page.

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2 I. Multiple choices (There is only one correct answer for each question. 3 points each, 36 points total) 1. When the marginal product curve is downward sloping, the average product curve A) must also be downward sloping. B) might be either upward or downward sloping. C) must be upward sloping. D) must be horizontal. Answer: B 2. The vertical distance between the total variable cost curve and the total cost curve ________ as output increases; the vertical distance between the average variable cost curve and the average total cost curve ________ as output increases. A) decreases; remains the same B) is constant; becomes smaller C) increases; becomes smaller at first but then increases D) increases; remains the same Answer: B 3. In perfect competition, an individual firm A) faces unitary elasticity of demand. B) has a price elasticity of supply equal to one. C) faces a perfectly elastic demand. D) has perfectly elastic supply. Answer: C 4. A firm's shutdown point is the quantity and price at which the firm's total revenue just equals its A) total cost. B) total variable cost. C) total fixed cost. D) marginal cost. Answer: B 5. To its maximize profit, the monopolist produces on the ________ portion of its demand where ________. A) elastic; P = MC B) elastic; MR = MC C) inelastic; P = MC D) inelastic; MR = MC Answer: B
3 6. The figure above shows a typical perfectly competitive corn farm, whose marginal cost curve is MC and average total cost curve is ATC. The market is initially in a long-run equilibrium, where the price is \$3.00 per bushel. Then, the market demand for corn decreases and, in the short run, the price falls to \$2.50 per bushel. Corn production is a constant-cost industry. In the new short-run equilibrium, the farm

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## This note was uploaded on 06/16/2011 for the course ECON 110 taught by Professor Tan during the Spring '07 term at HKUST.

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Final 2008 Answer - Econ 110 L3 L4 Spring 2008 Instructor...

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